M&A Finds Some Summer Sizzle: IFR
M&A bankers entered 2025 with big expectations that it would be a banner year for dealmaking. After a rocky start, the year is now shaping up to be decent – with sellers coming to market and buyers opening their wallets.
Several M&A bankers said the market shifted abruptly in late May and June after shutting down in April when US president Donald Trump unveiled his tariff policy.
Bankers said that although geopolitical and macroeconomic uncertainties remained thorns for M&A deals, the appetite to do deals had improved significantly – partly because many dealmakers expect uncertainties to persist for months or years.
From the start of June through to mid-August there have been announced deals with a value of US$907bn, up 52% from the same period a year ago. It marks the best summer season since 2021, according to LSEG data.
Japan continues to be a standout region for M&A, as it has been all year. The value of deals in Japan in the June to August 13 period was up a whopping 263% to US$98.5bn – one of its best summers ever, at least so far. The value of deals for US target companies was up 64% to US$413bn, and for European targets the deal value was up 10% to US$165bn.
"Confidence has increased since earlier in the year and financial and strategic buyers are now more active in their pursuit of M&A," said Stuart Ord, head of UK M&A for Deutsche Numis. “We’re cautiously optimistic that the outlook for M&A will improve through the rest of the year and that will hopefully make 2026 a better year.”
Big deals rule
The deck has been stacked in favour of large deals. The value of announced deals that are between US$500m and US$1bn in size since the start of June is down 16%, and for deals smaller than US$500m the total value is down 13%.
By contrast, mega deals – those valued at US$10bn or more – accounted for US$312bn of the total summer volume, up more than fivefold compared with the same period last year. So far, it’s the best summer for mega deals since 2019.
Deals valued between US$5bn and US$10bn also jumped by 111% from a year earlier to US$118bn, while deals valued between US$1bn and US$5bn rose 13% to US$253bn.
An M&A banker said that not only are large transformative deals getting done, but they are closing "faster than they have in years". He said the regulatory environment has improved. That was certainly an expectation coming into the year – that the Trump administration would relax regulatory scrutiny.
And while deals are closing faster, fewer deals are coming off the rails. So far this year, 488 deals have been withdrawn, the fewest in more than a decade and down 20% compared with the same stage of 2024.
The biggest deals this summer have included Union Pacific agreeing to buy Norfolk Southern for US$85bn and Merck buying Verona Pharma for US$10bn.
Amphenol bought CommScope’s Connectivity and Cable Solutions business for US$10.5bn. And Apollo-backed Athora agreed to buy European savings and retirement services group Pension Insurance Corporation for £5.7bn.
Those deals show both private equity and corporate buyers appear to have regained appetite.
“Private equity has dry powder to deploy and has more recently shown willingness to move onto the front foot in public and private situations," said Ord at Deutsche Numis.
“Strategics are also increasingly willing to move onto the front foot. Boards of some corporates are concluding that this uncertain environment may be the 'new normal' for the foreseeable future and so they should go for it if they are in good shape and strategic M&A is executable.”
Both private equity and a corporate bidder were involved in a UK deal that came to a head last week for healthcare property firm Assura. After a months-long fight, shareholders opted for a £1.8bn offer from Primary Health Properties rather than an offer from a KKR-led consortium.
That was also significant as Assura shareholders opted for a mostly shares offer over cash, which some saw as a vote of confidence in UK listed companies by major institutional investors. Deutsche Numis was joint lead financial adviser to PHP.
“It was good to see long only institutions speaking out in support of the compelling strategic logic and medium-term value creation of PHP's offer for Assura versus the competing offer of cash today," Ord said.
There are also signs of the lofty and opportunistic ambitions that often show up when M&A markets perk up – not least in the high technology arena.
Upstart AI tech company Perplexity has offered US$34.5bn in an unsolicited bid for Alphabet's Chrome browser. Perplexity, barely three years old, made its offer as Alphabet faces an upcoming antitrust decision that could force it to sell its web browser.